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ENERGY: Egypt-Cyprus deal for 'Aphrodite' gas attracting big investors

11 February, 2019

The intergovernmental agreement signed by Egypt and Cyprus for the Cypriot Aphrodite gas field has triggered great interest from international oil companies, down streamers and financial institutions, Egypt’s Minister of Petroleum and Mineral Resources Tarek El-Molla told the Cyprus News Agency.


He said that after the important umbrella agreement for building a gas pipeline between the two countries, discussions are now taking place to accelerate the process after completing the constitutional and legal procedures, which should then be followed by a commercial agreement for the project.

The Minister also stressed the multiple benefits for Cyprus from cooperating with Egypt in the framework of the recently established Eastern Mediterranean Gas Forum (EMGF).

Cyprus, Greece, Egypt, Italy, Israel, Jordan and Palestine participate in the EMGF, which is based in Egypt and its objective is the optimal joint exploitation of hydrocarbon resources in the Eastern Mediterranean. But the minister was less than optimistic about the viability of the EastMed pipeline which does not involve Egypt.

How important is the newly established EMGF for your country?

Egypt is embarking on an ambitious program to become a regional energy hub, with Gas as the most important pillar, we do not intend to depend only on the Egyptian resources and facilities. Our endeavour is to be the gateway for all East Med Gas to access potential markets.

We are constantly enhancing bilateral and multilateral cooperation with all the relevant partners; an obvious example is the Egyptian – Cypriot - Greek cooperation going on the highest level. It’s now time to extend an umbrella to include all these cooperation efforts and to set a mechanism for a structured policy dialogue to build a shared vision and set the scene for a stable regional gas market; one that can optimally utilize the current and future infrastructure to reduce cost and keep competitive edge, minimize risk, and encourage the quick monetization of the regional reserves and attract more investments in the gas industry in East Med.

All these targets will have a great impact on the welfare of the whole region including Egypt. They are completely aligned with the general Egyptian policy, which adopts 1) cooperation and integration with all countries specially the neighbouring ones and reinforcing these relations with economic and commercial bonds, 2) sustainable economic development and investment attraction to achieve high growth rates and increase employment rates, 3) open market policy and 4) full utilization all the Egyptian soft and hard assets and capabilities.

In this sense, we see the EMGF as a very important tool that will yield great benefits to Egypt and the region.

How can this Forum help smaller countries like Cyprus develop their reserves and benefit more from the region’s energy wealth?

The EMGF will build a structured dialogue between all parties across the Gas value chain; Producers, Consumers, Transit countries and industry parties as well.

This will in turn enable integration and shared use of existing and future infrastructure. It will significantly impact the feasibility thresholds of new infrastructure allowing small reserves to be quickly monetized.

The EMGF will also allow a clear vision for the region’s gas future encouraging more E&P activities.

Cyprus will benefit from EMGF in many ways; by quick monetization of its current reserves, potential increase in future discoveries and integration with other parties in the value chain opening new opportunities of cooperation and stable technical and commercial cooperation.

How important is the participation of both Egypt and Israel in this Forum?

There is no doubt that Economy makes Politics. Cooperation under the EMGF will help all members have common goals and possess win-win situations; they can realize benefits through cooperation more than what might be gained through conflicts.

It is very important to sit together on one table and discuss our concerns and find a resolution in gas matters, this can be a start for further resolutions of other conflicts.

Another very important point is the external image; this region has been perceived as a conflict zone for a long period, it is about time now that we start sending a different message to the world and build trust that this is a safe and secure environment for investment. This image will benefit all of us and open lots of opportunities in many fields; not just in the Gas industry.

Egypt signed an agreement with Cyprus to connect Aphrodite gas field to its liquefaction plants for re-exportation. Do you think that this project could soon proceed to the commercial exploitation stage?

The Governmental agreement signed between Egypt and Cyprus was indeed very important as an umbrella to encourage investors. It highly emphasizes the two governments’ support and commitment of this cross-border project.

As a result, we have witnessed great interest from the IOCs, down streamers and financial institutions. Discussions are now taking place to accelerate the process after completing the constitutional and legal procedures at each country. This shall then be followed by a commercial agreement for the project.

Is the East Med gas pipeline between Cyprus, Greece, Israel and Italy feasible and economically viable?

When it comes to the East Med, I would say that the options are many. Nevertheless, we believe that Egypt is the best option both economically and politically. The existing LNG facilities and infrastructure give Egypt a competitive edge, since each existing facility would now cost around $10 bln to implement, making it the most economic option.

Additionally, Egypt’s policy is open market and seeking maximum benefit of all parties, both producers and consumers. We encourage any options that can help producers utilize their resources and consumers secure their needs in the most efficient, quick and sustainable way and with the least cost; to save any avoidable expenses to the economies of the countries on both sides.

The feasibility study for the East Med gas pipeline project will take up to 2 years, which in itself is a luxury the region can’t afford anymore.